Hot inflation and surging Omicron top this week’s big market events

US sharemarkets stabilised after federal reserve meeting minutes released last week showed that fed officials are anticipating an earlier and faster rate hiking cycle than expected.

Likewise, the ASX200 regained the significant 7400 level that it spent the last three months of 2021 rotating around.

Here are the top five things that happened in markets this week.

1. Hot US inflation

US inflation reached its highest level in almost 40 years, hitting an annualised 7 per cent in December, bolstering expectations the Federal Reserve will begin lifting interest rates in March.

2. Omicron surge continues

The Omicron variant of COVID-19 continued to surge in the US, Europe, Canada and Australia, leaving hospitals straining under the weight of case numbers, grocery shelves empty and supply chains disrupted.

3. Crude oil rises

After falling more than 25 per cent in November to below $63.00 per barrel, the price of crude oil rallied above $82.00 as inventories in the US dropped to their lowest level since 2018, and the IEA’s director Faith Birol highlighted serious supply disruptions in Libya, Nigeria and Ecuador.

4. US dollar takes a breather

Despite the strong US inflation print, the US dollar fell against the AUD as traders moved to price in a peak in US inflation, and the Federal Reserve signalled it will take a gradual approach to interest rate hikes in 2022.

5. Iron ore recovery continues

Iron ore reached three-month highs above $130 per tonne, supported by the dovish shift by the Chinese central bank, the PBoC, in early December, and as La Nina rains disrupted shipments from Brazil.

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All trading carries risk. The figures stated are as of January 13, 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.
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